Undecided between FZROX and VTSAX? That’s okay because these two funds have similar investment objectives and characteristics.
In this blog post, I will discuss the details and differences between FZROX and VTSAX to help you pick the best index fund for your portfolio.
FZROX vs VTSAX: Fund Objective
FZROX, also known as the Fidelity ZERO Total Stock Market Index Fund, was launched in 2018 by Fidelity Investments. Its goal is to track the total return of a broad range of U.S. stocks, including small, mid, and large-cap stocks in the Fidelity U.S. Total Investable Market Index.
VTSAX, or the Vanguard Total Stock Market Index Fund, was launched in 1992 by John C. Bogle, who is known as the father of index investing. It covers almost all sectors of the U.S stock market and provides low-cost exposure to stocks.
FZROX vs VTSAX: Expense Ratio
VTSAX charges 0.04% per year, while FZROX is a no-fee mutual fund. This means you don’t have to pay any fee to Fidelity for owning this specific fund.
When selecting an index fund, the expense ratio is critical. You want to keep your expense ratio as low as possible so that it does not reduce your return.
Even though FZROX doesn’t charge a fee, the expense ratio from VTSAX is considered low compared to its peers in the same category.
FZROX vs VTSAX: Top 10 Holdings
FZROX and VTSAX are two identical mutual funds that track the total U.S stock market. They have the same top 10 holdings but with different weights.
- FZROX has 2631 holdings in its portfolio.
- VTSAX has 4143 holdings in its portfolio.
Here’s VTSAX Top 10 Holdings
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| Apple Inc. | AAPL | 5.71% |
| Microsoft Corp. | MSFT | 5.21% |
| Amazon Inc. | AMZN | 2.97% |
| Alphabet Inc. Cl A | GOOGL | 1.80% |
| Tesla Inc. | TSLA | 1.75% |
| Meta Platforms Inc. | FB | 1.64% |
| Alphabet Inc. Cl C | GOOG | 1.61% |
| NVIDIA Corp. | NVDA | 1.44% |
| Berkshire Hathaway Inc. Cl B | BRK.B | 1.05% |
| UnitedHealth Group Inc. | UNH | 0.98% |
VTSAX Sector Allocation
| Technology | 28.73% |
|---|---|
| Financials | 16.16% |
| Consumer Services | 12.89% |
| Industrials | 11.70% |
| Health Care | 11.66% |
| Consumer Goods | 8.30% |
| Oil & Gas | 2.72% |
| Utilities | 2.40% |
| Basic Materials | 2.07% |
| Non Classified Equity | 1.80% |
Data as of 12/31/2021
FZROX vs VTSAX: Dividend Yield
Vanguard Total Stock Market Index Fund (VTSAX) pays dividends to shareholders quarterly.
FZROX, on the other hand, distributes dividends annually. Once every December.
The dividend yield for VTSAX is 1.28%. The dividend yield for FZROX is 1.15%.
FZROX vs VTSAX: Annual Return
Let’s see how the Fidelity and Vanguard Total Stock Market Index Funds performed over the past five years.
| Funds | Fidelity® ZERO Total Market Index Fund | Vanguard Total Stock Market Index Fund Admiral Shares |
|---|---|---|
| 1 month | +3.97% | +3.82% |
| 3 months | +9.39% | +9.16% |
| 6 months | +9.39% | +9.09% |
| 1 year | +26.01% | +25.71% |
| 3 years | +25.81% | +25.77% |
| 5 years | – | +17.98% |
Final Thoughts: Comparing FZROX and VTSAX
1. FZROX has a smaller number of stocks in its portfolio compared to FSKAX and VTSAX. However, the returns of the three funds will be similar but not identical.
2. FZROX offers zero fees, and it’s likely that the asset managers make money through securities lending of the portfolios.
3. I would choose FZROX over VTSAX because it’s cheaper. Always keep your expenses as low as possible with everything.
4. If you intend to invest in VTSAX through Fidelity, you will be charged $75 for the trade. It’s pointless to pay more when you can get the same thing for less.
5. Fidelity funds have no initial minimum investment, whereas VTSAX requires you to invest at least $3,000 in the fund.
6. Since VTSAX is an ETF, it can provide more liquidity and the ability to write covered calls for hedging or generating additional income.